HI6028 Taxation Theory - Practice and Law Tutorial Questions – Week 9 - Holmes Institute Australia

Question 1 HI6028  

Issue

David received property in inheritance from his grandfather on 23^rd march 2000 after their death. After getting the property he put this on a lease with a monthly rent of $7000 as he was working as a full-time employee at that time. For this lease agreement of its commercial property, he registers the company and also registered under the goods and service tax.

Rule

As per the ATO, an entity need to pay the GST on the commercially leased property if the same is registered under goods and service tax and also registered in the company's act. An individual can reimburse the expenses of the commercial property using GST credits (GST on goods, 2019).

Analysis

In the current case, David received the property and put on a lease for 10years and registered an entity and also register under GST law (Dixon, McNamara and Newell, 2008). So, he can claim GST credit as it fulfills the criteria of claiming the deduction for the expenses.

Conclusion HI6028 

It is summarized from the case that, David is required to pay the GST on its rental income and he can reduce its tax liability by taking the deduction.

QUESTION 2

Issue

Wilson sports club registered under GST law on an accrual basis and generate monthly business statements. This entity pays swimming fees for its agent john by giving as a fringe benefit. The total invoice billed by the royal swimming club is around $330 including GST and Wilson did not pay until 2 July. Royal swimming club changed GST terms from accrual to cash and submits quarterly.

Rule

As per goods and service tax act, an entity is required to meet certain requirements to claim input tax credit is given as below:

An entity is required to register under GST  law for claiming the input tax credit

Purchase price of goods should include GST

Payment of an item is paid or required to be paid

Received tax invoice from the supplier

Application

Wilson sports club satisfied all the above conditions as they are registered under GST and received a tax invoice from the supplier (Lease on commercial property, 2019). Fulfilling these conditions, it can claim the input tax credit for the swimming fees charged for its agent. Wilson can claim the input tax credit monthly.

An entity’s annual turnover decides its reporting to GST in a month, quarterly, or annually. If the turnover is less than $10 million than monthly if its exceeds this they can pay the GST  quarterly. There is an option to an individual to pay monthly or annually (Warren, 2018).

 

Question 3 

Particulars	Bowens	Builder’s choice
Concrete mixer($660*110)	$66000
GST paid	$6600
Total	$72600
Return amount	$7200
Return GST		$720

 

As per the GST law, Builder’s choice is required to refund the total amount paid by Bowens ltd including the amount of GST  in it (Datt and Keating, 2018). As the amount paid by Bowns ltd is inclusive of GST that is the reason its is required to refund the amount including the GST value.

93178469556139.  

Books and Journals

Datt, K.H. and Keating, M., 2018, April. The Commissioner’s obligation to make compensating adjustments for income tax and GST in Australia and New Zealand. In Australian Tax Forum (Vol. 33, No. 3).

Dixon, T., McNamara, P. and Newell, G., 2008. The strategic significance of environmental sustainability by Australian?listed property trusts. Journal of Property Investment & Finance.

Warren, C., 2018. Building Energy Efficiency Certificates and commercial property. Routledge Handbook of Sustainable Real Estate.

Online

GST on goods, 2019. Available through: < https> [Accessed on 5^th June 2020].

Lease on commercial property, 2019. Available through: < https text=As> [Accessed on 5^th June 2020].